Word surfaced July 16 that J.P. Morgan Chase was looking to acquire CIT’s factoring business, but a spokeswoman for J.P. Morgan declined comment.

If it makes a run at the CIT unit, the bank will face competition from GMAC Financial Services and W.L. Ross & Co., both of which are also said to be eyeing the factoring operation, according to investment bankers. GMAC does have a factoring business, while W.L. Ross does not, although chairman and chief executive officer Wilbur Ross said earlier this year that at some point his firm will likely acquire a financial institution. A spokeswoman for GMAC declined comment, while Ross could not be reached for comment.

The factoring arm of CIT finances at least $50 billion in wholesale inventory, and provides financing to about two-thirds of the fashion industry, sources said.

Many fashion firm advisers expect CIT’s factoring arm may find a new home.

Gilbert Harrison, chairman of investment banking firm Financo Inc., said, “The factoring assets are most valuable, and every day they lose more value since the clients are looking at more secure sources from other banks and factors.”

Victor Wahba, accounting partner at Weiser LLP, added, “CIT will need to be broken up. The commercial finance side will wind up somewhere intact.”

According to Michael Appel, managing director of Quest Turnaround Advisors, “A prepackaged restructuring is done out of court, with all the senior lenders locked up and other credit groups having prenegotiated certain issues before filing the bankruptcy court petition.”

Citing General Motors and Chrysler, Appel said prepacks, as they are called, are “looking increasingly successful. Companies don’t want to go into Chapter 11 and languish in court. With other bond payments due shortly after the planned Aug. 17 exchange, there may be a feeling that not enough restructuring of debt has been done.”

Meanwhile, many vendors have decided not to take any chances. Louis Cappelli, ceo of Sterling National Bank, said, “There are an awful lot of people seeking a new home.”

He added his bank has been “getting numerous calls in the last week to 10 days. We also have a very close relationship with many [accountants] who are in contact with us and who are instrumental in working with manufacturers and vendors.”

Cappelli said his bank has seen a wide range of potential new clients from small to large firms, many with strong balance sheets and some that are less so.

While his bank has a factoring operation and the capacity to take on new clients, he suggested that a CIT failure would cause some disruptions, as it “takes some time for water to seek its own level.”